The third, fourth and fifth floors of the Lancaster Block building at 50 Monument Square in Portland would be turned into 21 studio and one- and two-bedroom apartments, according to plans submitted by PK Realty Management. Staff photo by Derek Davis

Developers want to convert three stories of office space in a historic Monument Square building into apartments.

Portland-based PK Realty Management has submitted plans to add 21 market-rate apartments to vacant offices in 50 Monument Square, a six-story red brick building at the edge of the Portland’s financial district.

Some of the Class B office space in the building, called the Lancaster Block, has been vacant for at least four years, said Jennifer Packard, a principal from PK Realty.

The building needs extensive renovations before it can even be rented as office space, which is a lackluster market compared to the demand for rental apartments, she added.

“We noticed there is a great deal of vacancy for that type of office space in town and at the same time a great need for market-rate housing,” Packard said.

PK Realty plans to add studio, one- and two-bedroom apartments on the third, fourth and fifth floors. It will continue leasing the other three floors to commercial tenants. Apartments should be ready to rent by this summer, Packard said.

The Lancaster Block was built in 1881, designed by John Calvin Stevens and Francis Fassett. It was named for Lancaster, New Hampshire, the hometown of its builder, J.B. Brown, according to the National Register of Historic Places. It was added to the registry in 1982.

PK Realty bought the building last April for $4.25 million, according to city records.

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This is at least the second prominent example of converting downtown, out-of-date office and commercial space into residences. Last year, Northland Enterprises added 28 apartments to the four upper floors of the Clapp Memorial Building, on Congress Street across Monument Square from the Lancaster Block. The Maine College of Art has leased those units for upperclassmen and graduate student housing.

It doesn’t always make sense to change from commercial to residential uses, but if renovating a building into Class A office space is already expensive, putting the extra work into converting to apartments instead can be the best idea, said Nate Stevens, a commercial broker with the Boulos Co.

“To turn this into office space is so expensive, it is honestly a lot more money to go the residential route,” Stevens said. “You can get more per square foot for residential.”

Average Portland rents for midgrade, heated apartments in 2018 ranged from $850 per month for a studio to $1,380 for a two-bedroom, according to the city’s rental market survey.